Daily Tax Update - March 18, 2005

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS FROM ITS RECESS ON APRIL 4TH.

HOUSE, SENATE PASS FISCAL YEAR 2006 BUDGET RESOLUTIONS:
Before adjourning for their two-week recess, both the House and Senate passed their Fiscal Year 2006 budget resolutions. The House $2.57 trillion budget resolution passed by a vote of 218 to 214 and provides a total of $106 billion for tax relief, of which $45 billion is protected through reconciliation instructions. The Senate’s $2.6 trillion budget resolution provides for $134 billion in tax cuts over the next five years. This figure includes $64 billion that was added last night to repeal taxation of Social Security benefits. The Senate budget resolution passed by a 51-49 margin.

  • After the recess, a budget conference will meet to try to reconcile the differences in the two budget resolutions. Senate Budget Committee Chairman Judd Gregg (R-NH) said, "This is not the perfect bill. It is not the bill I would have chosen if I'd had a magic wand. But this is the middle of the process and I hope it will improve as we complete action." Gregg added that "it will be impossible to develop a product everyone in both chambers will find perfect, but I am optimistic Chairman Nussle and I can produce a final product a majority will find acceptable."

TAX BILLS INTRODUCED MARCH 17:

  • H.R. 1377 sponsored by Rep. Lloyd Doggett (D-TX) would deter the smuggling of tobacco products into the United States.
  • H.R. 1379 sponsored by Rep. Phil English (R-PA) would treat electric transmission property as 15-year property for depreciation purposes.
  • H.R. 1380 sponsored by Rep. Phil English (R-PA) would expand incentives for education.
  • H.R. 1387 sponsored by Rep. Wally Herger (R-CA) would clarify the excise tax exemptions for aerial applicators of fertilizers or other substances.
  • H.R. 1388 sponsored by Rep. Wally Herger (R-CA) would make permanent the increase in expensing of certain depreciable business assets enacted by the Jobs and Growth Tax Relief Reconciliation Act 2003 and extended by the American Jobs Creation Act of 2004.
  • H.R. 1397 sponsored by Rep. Nancy Johnson (R-CT) would allow a credit against income tax for certain energy-efficient property.
  • H.R. 1405 sponsored by Rep. John Larson (D-CT) would exclude from income and employment taxes and wage withholding property tax rebates and other benefits provided to volunteer firefighters and emergency medical responders.
  • H.R. 1411 sponsored by Rep. John Linder (R-GA) would clarify that a convention or association of churches includes individuals (with or without voting rights) as well as churches.
  • H.R. 1417 sponsored by Rep. Jim McCrery (R-LA) would permanently extend the subpart F exemption for active financing income.
  • H.R. 1421 sponsored by Rep. Jim Nussle (R-IA) would allow for an energy efficient appliance credit.
  • H.R. 1435 sponsored by Rep. Charles Rangel (D-NY) would deny the foreign tax credit and the benefits of deferral to companies doing business directly or through subsidiaries in Sudan until the Government of Sudan takes demonstrable steps to end genocide in Sudan.
  • S. 646 sponsored by Sen. Jim Bunning (R-KY) would allow distilled spirits wholesalers a credit against income tax for their cost of carrying Federal excise taxes prior to the sale of the product bearing the tax.
  • S. 661 sponsored by Sen. Orrin Hatch (R-UT) would provide for the modernization of the United States Tax Court.
  • S. 663 sponsored by Sen. Jeff Bingaman (D-NM) would allow self-employed individuals to deduct health insurance costs in computing self-employment taxes.
  • S. 669 sponsored by Sen. Gordon Smith (R-OR) would treat natural gas distribution lines as 15-year property for purposes of depreciation.
  • S. 671 sponsored by Sen. Joseph Lieberman (D-CT) would allow a credit against income tax for certain fuel cell property.
  • S. 673 sponsored by Sen. Gordon Smith (R-OR) would clarify that federally recognized Indian tribal governments are to be regulated under the same government employer rules and procedures that apply to Federal, State, and other local government employers with regard to the establishment and maintenance of employee benefit plans.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them.  Read  more information on Steptoe's tax practice